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Questions and Answers
What is the fundamental challenge businesses face when operating in international markets?
What is the fundamental challenge businesses face when operating in international markets?
The paradox of standardization versus localization (or adaptation).
What are the two main strategies for international market entry?
What are the two main strategies for international market entry?
The 'Triple Bottom Line' framework prioritizes social, environmental, and financial goals equally.
The 'Triple Bottom Line' framework prioritizes social, environmental, and financial goals equally.
True
What is the key concept introduced by Freeman and Reed regarding business strategy?
What is the key concept introduced by Freeman and Reed regarding business strategy?
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What is the main idea behind the article 'The Social Responsibility of Business is to Increase its Profits'?
What is the main idea behind the article 'The Social Responsibility of Business is to Increase its Profits'?
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What is a common challenge for MNCs (multinational corporations) in their efforts to achieve success in emerging markets?
What is a common challenge for MNCs (multinational corporations) in their efforts to achieve success in emerging markets?
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Which of the following are benefits of strategic alliances?
Which of the following are benefits of strategic alliances?
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What is the 'planning fallacy'?
What is the 'planning fallacy'?
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Why do international expansions often fail?
Why do international expansions often fail?
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What are the key factors that often contribute to successful international expansions?
What are the key factors that often contribute to successful international expansions?
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What are the core competencies of a company?
What are the core competencies of a company?
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What is the key advantage of focusing on core competencies?
What is the key advantage of focusing on core competencies?
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What is a strategic architecture in the context of business strategy?
What is a strategic architecture in the context of business strategy?
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What are the four main reasons for the increased success rate of mergers and acquisitions in recent years?
What are the four main reasons for the increased success rate of mergers and acquisitions in recent years?
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The article suggests that companies that frequently engage in mergers and acquisitions (at least one per year) tend to achieve higher returns than those that rarely or never acquire other companies.
The article suggests that companies that frequently engage in mergers and acquisitions (at least one per year) tend to achieve higher returns than those that rarely or never acquire other companies.
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What is a key characteristic of a successful merger?
What is a key characteristic of a successful merger?
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What is the main idea behind the DaimlerChrysler merger case study?
What is the main idea behind the DaimlerChrysler merger case study?
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What is the main reason for the success of the Fiat Chrysler merger?
What is the main reason for the success of the Fiat Chrysler merger?
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Study Notes
Globalization and Internationalization
- The paradox of standardization versus localization (adaptation) is a fundamental challenge for businesses operating internationally.
- Finding the optimal balance between maintaining consistent global strategy (uniform products) and adapting to local market needs is key.
- Standardization pros: economies of scale, consistent brand, competitive price/quality.
- Standardization cons: assumes homogeneous customer preferences, overlooks local opportunities, regulatory barriers, and risk of local market failure.
- Adaptation pros: customer satisfaction, cultural sensitivity, compliance with local regulations, flexible marketing.
- Adaptation cons: less economies of scale, slower market entry, more complex supply chain, and possible dilution of global brand.
- Checklist for global standardization strategy: global market segment, global strategy synergies, no external constraints (regulations), no internal constraints.
The State of Globalization in 2023
- Globalization's backlash (2017): driven by nationalism, economic inequality.
- Economic dislocation (2017): globalization's impact on job losses, increasing inequality, and perceived benefits favoring elites.
- Three possible futures : muddle through, irrational exuberance, and billiard table world.
Managing the Paradox of Globalization and Localization
- Local regulations and consumer preferences for products force localization.
- Distribution networks and supply chains need localization to meet local demands.
- Maintaining a global brand requires aligning with local cultural values, which can be challenging.
- Important to develop/market products for local markets.
- Diversity in brand portfolios allows companies to cater to both global and local markets.
Managing Across Borders in a Socially Responsible Way
- Friedman's view (1970): business' sole social responsibility is to maximize profits within legal and ethical boundaries.
- Critics of "social responsibility": undemocratic taxation of shareholders.
- Social problems: role of the government, not business.
- Many CSR actions are self-serving and harm free-market principles.
Ethical Concerns at the Bottom of the Pyramid (BOP)
- Marketing to low-income earners (BOP): ethical dilemmas.
- Finding a balance between profit maximization and social responsibility is essential.
Compassion vs Competitiveness (Dilemma at Novo Nordisk)
- Novo Nordisk's strategy integrates social, environmental, and financial goals, prioritizing sustainability alongside profitability and patient needs.
- They emphasize ethical decision-making.
- Faced challenges during Greece’s financial crisis, by maintaining insulin provision despite reduced profitability.
- Key ideas: triple bottom line, patient-centric approach, ethical leadership, long-term sustainability, stakeholder engagement, balancing tensions.
Market Selection
- Evaluate company capabilities' relevance and transferability to new countries.
- Assess if new capabilities will be complimentary and value-adding to the organization.
- Leverage existing capabilities abroad.
Market Entry Strategies
- High failure rate in market entry.
- Developing a robust outside view: review of six key predictors of success.
- Create a reference class: Analyse past market entry successes and failures of similar firms.
- Improve the inside view by evaluating value proposition and capabilities along with market size, competition, and expectations for market share and revenue.
- Avoid biased decisions using core market entry strategies, which can reduce market entry risks and increase success rates.
The Hassle Factor
- Foreign investment location inconveniences ("hassle factor").
- Key factors: local transportation standards, health risks, medical standards, business facilitation challenges meeting reliability standards, foreigner discrimination,
- International expansion management: mitigate negative impacts of the hassle factors.
Core Competencies
- Core competences = organization's collective learning capacity: coordinate different production & integrate multiple technologies.
- Core competencies drive competitiveness and form basis for new product development.
- Three tests for identification: access to variety of markets, significant contributions to product benefits, difficulty for competitors to copy.
- Honda exemplifies successful use of core competency in engine/powertrain systems.
Modes of Entry (Strategic Alliances)
- Strategic alliances: valuable tool for global market entry.
- Key considerations: Synergistic effects, rapid development, access to resources, and cost reduction.
- Alliance selection considerations: cultural factors, financial strength, strategic aspects, and organizational strategies.
- Companies should strive for balance between local and global objectives.
- Holistic analysis for holistic perspective of alliance portfolio management.
Market Exit Strategies
- Companies often misunderstand or misestimate the challenges associated with expanding into new markets.
- Some expansions require thorough due diligence and careful analysis to determine the viability before making the decision to withdraw. Common challenges for market exit include tax advantages, complications and cost, types of mergers, due diligence process, and considerations for mergers and acquisitions.
- Examples of unsuccessful expansions: Target in Canada, Tim Hortons in the US, Best Buy in China, Tesco in the US and Walmart in Germany. Success stories include Aldo in the US, Carrefour in China, and Nordstrom Canada.
Success and Failure in Technology Acquisitions
- Differentiating buyer and seller motivations in technology acquisitions is a key strategic insight for success.
- Integration dilemma: integrating acquired firms to realize synergies but preserving their innovative culture and tacit knowledge.
How to manage alliances better
- Establishing a dedicated alliance management function allows firms to oversee how multiple partnerships interact.
- Ensuring that the alliance process balances local business needs with corporate-wide goals is important for long-term success.
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Description
Test your understanding of the complexities of globalization and internationalization in business. This quiz covers the balance between standardization and localization, focusing on their pros and cons. Explore strategies for effectively entering global markets while maintaining brand integrity.
